Abstract
This study examines the existence of moral hazard inherent in the choices of prevented planting (PP) and late planting (LP). The PP provision is defined as the “failure to plant an insured crop by the final planting date due to adverse events” such as excess moisture or drought. If the farmer decides not to plant the crop, (after appraised by an agency) the farmer receives a PP indemnity. LP is an option for the farmer to plant the crop and still maintain the crop insurance when the farmer fails to plant crop by the final planting date. However, by choosing LP option, the farmer has to lower the insurance coverage level depending on the LP date due to potential yield loss. Crop insurance may alter farmers’ decision choices in production in making the selection of PP or LP. In other words, crop insurance can increase the likelihood of PP claims even though farmers can choose LP. In particular, this paper seeks to find evidence that the farmer with higher insurance coverage would tend to choose PP statistically more often. In this case moral hazard would then be observed.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
